2. INNOVATOR- Taking the lead in
driving growth for customers
SKILLS – Digital hub
Digitally skilled people
employed in India
~250,000
Talent composition – 2x
growth in 5 years
Technical output –
Engineers annually
> 1 million
LEADING GLOBAL
SOURCING NATION
67%
Global sourcing share
Source: NASSCOM
India: A matchless IT business
partner
6.2 million
Growth in funding in
B2B space over the last
year
250%
Start-ups innovating for
futuristic technology
areas
Collaboration between
large & small providers
~50
>4,200
Population with <35
years of age
>75%
Growing spending
power – amongst the
biggest market
Wider online user base;
29% growth in internet
users
375 million
~1.2 billion
MARKET: Most Attractive
Number of Global
Delivery Centers
(GDCs) > 78
>670
Entry level wages –
Lesser compared to
source nations
Diverse supplier
landscape; >8000
digital-centric
+16000
~7-8X
BUSINESS INFRASTRUCTURE-
Excellence in delivery
3. By early 1990s, US-
based companies began
to outsource work to
low-cost and skilled
talent pool in India
It Industry started to
mature.
Increased investment in
R&D and infrastructure.
India increasingly seen
as a product development
destination
The number of firms in
India grew in size and
started offering complex
services such as product
management and go-to-
market strategies.
Western firms set up a
number of captives in
India
Firms in India became
MNCs with delivery
centers across the globe.
India’s IT sector is at an
inflection point, moving
from enterprise servicing
to enterprise solutions.
The country has already
become the third largest
start-up base
Pre-1995
1995-2000
2000-05
2005-Present
Growth of India’s IT Sector
4. Revenue
(US$ Bn)
Employees
(Million)
No. of Firms
GDP Share
Share in
Service
Exports
Share in
Global
Sourcing
Value
Addition
1
0.06
<1,000
~1%
<5%
-
>8
0.34
~ 2,000
1.8%
10.5%
-
~78
2.3
10,000 –
12,000
6.1%
26%
47%
1
3.7
>16,000
9.3%
>45%
67%
1990-2000
1980-1990 2000-2010 2010 onwards
-
Low-end
support &
development,
Time &
Material
pricing
End-to-end
services;
Strategic
partner; (non-
linear
growth); Pay-
as-you-use
Bimodal IT,
Digital Bus,
Automation
platforms,
IoT, smart
tech,
innovation
Cost Arbitrage Collaboration Value Addition
Enabling
Smart
Data given
for FY1991,
FY2000,
IT
Contribution
to
India
India IT
associated
5. STATE OF
PLAY
• India is fast emerging as a
digital economy…Digital
India, Make in India,
Skilling India are creating a
renewed thrust on the
domestic market.
• Indian IT companies can
offer solutions in the
following segments:
Social Mobile Analytics
& Cloud (SMAC),
ERP, CRM, mobility
and user experience
technologies.
Business Process
Management sector,
which is being driven
by greater automation,
expanding omni-
The Indian IT and ITeS industry is
divided into 4 major segments – IT
services, Business Process
Management (BPM), software
products & engineering services, and
hardware.
IT Services:
Market Size: USD75 Bn
>81% of revenue comes from
Exports
Banking, Financial Services &
Insurance (BFSI) is the major
vertical.
BPM:
Market size: USD28 Bn
87% of revenue comes from
Exports
Market size - USD54 billion by
2025
Software Products & Engineering
Services:
India2016: Indian IT Industry
clocked revenues of USD
146 billion…Exports
segment USD 98.5
Billion…Domestic market
grew by 14%- fuelled by
6. Indian IT-BPM industry
IT-BPM revenue break-up1
Industry revenues (excluding e-Commerce) total at USD
143 Bn; growth reflects variable impact of currency.
Exports cross USD 100 Bn; doubled over last 6 years
IT services ~USD 75 Bn
India has become the global hub for high value added
services- ER&D and Product Development revenues
~USD 26 Bn.
World’s biggest BPM destination- Revenues of USD 28
Bn.
~USD 17 Bn E-Commerce industry, growing at 20%
boosting digital consumption.
Increased consumer adoption of digital tech coupled
with a technology focused Government growth agenda
•Aadhar (Unique Identification Number) enrolment
crossing 1 Billion
1 NASSCOM has begun to report eCommerce market as part
of domestic IT-BPM; historical numbers have been changed
to reflect addition of this segment
87 98 108
20
21
22
Exports Domestic e-Comm
USD billion
143
132
14 17
FY2015 FY2016E
FY2014
11
119
35
Hardwar
e
13
13
12
34
32
7. BPM exports: Knowledge services driving growth
IT services exports: Biggest segment of the industry
CADM,
47%
IS
outsourcin
g, 20%
Software
testing,
8%
Others,
13%
High-end
services,
12%
IT services: At par with industry growth rate - 10.3%;
BPM: Scale and maturity, the industry USP
•World’s largest IT services base - >7,500 firms
•67% share in global IT sourcing
•IS outsourcing: Fastest growing (>12%)
•Software testing: >11.5% growth; increased focus on
quality, digital transformation driving growth
•350+ MNC and GIC firms
•Y-o-Y growth of nearly 9 per cent
•38% global sourcing share
•Investments in platform-based solutions, digital
marketing services, analytics and consulting
fundamentally changing industry landscape
FY2016E: 100%= USD 61 billion
40%
22%
21%
2%
1%
1% 13%
CIS
F&A
Knowledge
services
HRO
Procurement &
logistics
Other horizontals
Vertical-specifc
8. Emerging players
~1,000-1,200
Small sized
~15,000 players
Mid-sized
120-150 players
11
Large
players
>40%
~35-
40%cent
~10-11%
~9-10%
Start-ups emerging as the partners of the future
IT-BPM Industry Structure, FY 2016
Source: NASSCOM
Indian IT-BPM: Mix of players
• Fully integrated players offering complete range of
services
• Large scale operations and infrastructure
• Presence in over 60 countries
• Mid-tier Indian & MNC firms offering services in
multiple verticals
• Dedicated captive centers
• Near shore and offshore presence in more than 30-35
countries
• Players offering niche IT-BPM services
• Dedicated captives offering niche services
• Expanding focus towards sub Fortune 500/1,000 firms
• Small players focusing on specific niches in either
services or verticals
• Includes Indian providers and small niche captives
10. • Industry employee base reaches 3.7 million,
addition of 2 lakh in FY2016
• eCommerce industry - 40,000 employees
• 1.1 million jobs added in last 5 years
• Annual talent output: 6.2 million
• >1 million technical graduate pool
• ~36-38 per cent share of global employable
talent pool for IT
• Indian IT industry a Global talent powerhouse
– representative of millennials, showcasing
diversity, and leadership in digital skills
• Talent hunt shifting from ‘Qualification’ to
‘skill based’; hiring ‘knowledge and expertise’
Direct employment *
6%
1730 1,840
1,040 1,090
720
760
FY2015 FY2016E
IT exports** BPM exports
3,49
0
3,69
0
* Excluding Hardware ** includes IT services, Software products, ER&D and product development *** excludes
Industry hiring levels steady;
specialized skill sets in demand
(‘000)
11. E-commerce
• India’s E-commerce business valued @ US$ 17 Bn
in 2016…US$70~90 Bn by 2020.
• 70 Mn online shoppers…100 Mn by end-2017.
• 63% of e-commerce is travel-related (tickets, hotel
bookings etc.
• E-tail business @ 29%
• Mobile/DTH recharge seeing >1 Mn transactions per
day.
• Electronics & Apparel are choicest purchases.
Policy Support:
• 100% FDI via automatic route is permitted in B2B
e-commerce.
• FDI in B2C e-commerce is permitted in the
following cases:
Single brand entities allowed to venture into E-
DRIVERS of E-commerce:
Young demography: >90% of online shoppers in
India belong to the 18 – 35 year age group.
Gender usage: 65% male and 35% female
Rising Broadband & 3G penetration
Rising standards of living & upwardly mobile
middle class with high disposable incomes and
busy lifestyles.
Urbanisation will increase to 40% from 31%
Growing nuclear households.
India’s leading e-commerce companies – Flipkart
(45% share), Snapdeal (26%), Amazon (12%),
PayTM (7%) and Others (10%).
Mode of Payment: Cash on Delivery (76%), Debit
Cards (10%), Credit Cards (7%), Net Banking (5%),
and Others (2%)
Growth in Mobile Phone user base is helping
the growth of the E-commerce Industry
• According to World Bank: “A 10% increase in
broadband penetration would yield a 1.38% increase
in GDP growth”.
• India’s Internet economy to reach a value of US$200
billion by 2017.
• 2016 data:
1 Billion+ active mobile phone subscriptions.
402 million+ internet users.
12. E&R
D
According to Consulting Firm – Zinnov:
“India accounted for $12.3 billion, or 40%, of
the total of $31 billion of globalized
engineering and R&D (E&RD) in 2015”.
The Indian E&RD market is expected to reach
US$ 38 Bn by 2020.
Services offered by Indian E&RD Firms
include:
Supporting clients on innovation
Enabling access to new markets (SBMs)
Designing products for emerging markets
(frugal engineering)
Innovating on existing designs to suit market
needs and client requirements
• There are over 400 service providers and
captives offering ER&D services from India
• Over 200,000 engineers have been employed by
service providers and captives in India
• Indian service providers invest around 3.5% in
R&D
• India-based ER&D centres resulted in cost
savings of USD 20 billion for global
organisations
13. DIGITAL INDIA
Digital infrastructure for every citizen: This
includes internet availability, digital identity, mobile
phones, bank accounts, safe and secure cyber space,
etc.
Governance and services on demand: It includes
real-time availability of services on mobile phones
and online platforms, enabling electronic and
cashless financial transactions possible, etc.
Digital empowerment of citizens: It encompasses
universal digital literacy, availability of digital
resources in Indian languages, etc.
ACTION PLAN:
• Setting up of a pan-India fibre-optic network .
• Wi-Fi services in cities with a population of more
than 1 million.
• Broadband access to 250,000 village clusters by
2019
• Digital lockers to each citizen, allowing them to
store all their original identification documents and
records
• Universal mobile phone connectivity
• Net Zero Electronic Imports by 2020
• Focus on moving toward automation in delivery of
government services
• Achievement of a leadership position in IT toward
betterment of health, education and banking services
VISION:
Electronics
manufacturing
Telecom sector
On-line
education
Healthcare
Broadband
sector
BUSINESS OPPORTUNITIES: Highlights of Budget 2017-18:
• Budget for pan-India Fibre-option network increased to Rs. 10,000
crores ($1.5 Bn)
• End 2017-18, high speed broadband connectivity on optical fiber will be
available in more than 150,000 villages under Bharat Net Scheme.
• A DigiGaon (Digital Village) initiative will be launched to provide tele-
medicine, education and skills to villages through digital technology.
14. IT schemes of GOI
Software Technology Parks of India
(STPI):
STPI was set up in 1991 as an
Autonomous Society under the
Department of Electronics and Information
Technology.
Services Provided: Statutory services,
data communications servers,
incubation facilities, training and value
added services.
Special Focus: SMEs and start up units.
STP scheme - a 100% export oriented
scheme, allows software companies to
set up operations in convenient and
inexpensive locations and plan their
investment and growth driven by
business needs. Over 2500 units are
Benefits under STP Scheme:
Customs Duty Exemption in full on imports.
Central Excise Duty Exemption in full on indigenous
procurement.
Central Sales Tax Reimbursement on indigenous purchase
against from C.
All relevant equipment / goods including second hand
equipment can be imported (except prohibited items).
Equipment can also be imported on loan basis/lease.
100% FDI is permitted through automatic route.
Sales in the Domestic Tariff Area up to 50% of the FOB
value of exports permissible.
Use of computer imported for training permissible subject
to certain conditions.
Depreciation on computers at accelerated rates up to 100%
over 5 years is permissible.
For more info. Visit STPI website - http://www.stpi.in
15. In 2005, the Ministry of Commerce & Industry,
Government of India enacted the Special Economic
Zone (SEZ) Act.
It provides drastic simplification of procedures and a
single window clearance policy on matters relating to
central and state governments.
The scheme is ideal for bigger Industries and has a
significant impact on future Exports and employment.
The SEZ policy aims at creating competitive,
convenient and integrated Zones offering World class
infrastructure, utilities and services for globally
oriented businesses.
The SEZ Act 2005 envisages key role for the State
Salient features of SEZ scheme are as under:
Duty free import/domestic procurement of goods
for development, operation and maintenance of
SEZ units
100% Income Tax exemption on export income
for SEZ units under Section 10AA of the Income
Tax Act for first 5 years, 50% for next 5 years
thereafter and 50% of the ploughed back export
profit for next 5 years.
Exemption from Central Sales Tax.
Exemption from Service Tax.
Single window clearance for Central and State
level approvals.
Exemption from State sales tax and other levies
as extended by the respective State Governments.
This scheme has a significant impact on future
exports & employment. About 202 IT-ITES
specific SEZs have been notified by the DOC.
For more info. Visit - http://www.sezindia.nic.in/
SEZ Scheme
17. Indian IT Trends:
Indian tech players are helping create smart enterprises through confluence of
Digital technologies- Cloud, Mobility, IOT, Social, Big Data
Industry players adopting multiple business models (partnerships/collaboration/
M&A) to address the digital opportunity
Indian service providers going bimodal- growth in both traditional and digital
markets
Rapidly growing start-up ecosystem redefining innovation
India’s consumer economy, Government’ initiatives for digitization of India -
driving activity in the domestic market 17
Source: NASSCOM
18. World’s fastest growing telecom network
Telecom subscribers (Jan 2017)
1,102.94 million
Wireless subscribers (Oct 2016)
1078.42 million
Broadband (>512 kbps download) subscribers (Oct 2016)
218.42 million
Internet user base
(2016)
462 million
Mobile internet users (June 2016)
371 million
Mobile data consumption
82Pb (2015)
3rd country globally to have >5 internet firms value at
>$ 1 Bn
2nd largest user base overtaking the US
To grow to 500 million by Dec 2017
To grow to 500 million by 2020
Avg data usage/month: 29% growth in 3G data
Source: Deloitte, IAMAI, IBEF, Nokia, TRAI, Zinnov, Secondary
India - 2020
India: A digitally mature economy
19. MINDTREE: '5/50 initiative' to promote in-house
disruptive ideas
INFOSYS: $500M for investing in technology start-ups
India 3rd largest technology start up base
Start-ups created every year
Funding; 125 per cent Y-o-Y growth
Active VC/PEs in 2015
Incubators & Accelerators
4,20
0+
$4.9
Bn
1200
+
Start-
ups in
India
110+
156+
Startups: India’s next wave of tech growth
Emerging in high impact areas
Industry pursuing multifaceted startup collaboration strategy
TCS: 31 academic alliances and 21 R&D partners
eCommerce -
820+
Analytics
400+
Edu-tech
200+
Health-Tech
120+
Consumer
Services
100+
IoT
75+
HCL: 'Value-portal' and 'MAD Jam' to foster employee-
led ideas
WIPRO: $100M initial corpus for venture fund
IBM Innovation Centers: 100 Big Data & IoT startups tie-
ups
20. START-UP INDIA
• India ranks 3rd globally in terms of the number of
start-ups.
• 19,000 technology-enabled start-ups. Dominated by
Internet and financial services start-ups.
• World's youngest start-up nation ~ 72% founders
less than 35 years in age.
• Bengaluru ranks 15th globally in Start-up Ecosystem
Ranking for 2015.
• Number of start-ups with Series A round funding in
2014 was 46 while it increased to 114 in 2015.
• Total Start Up investment: $4.7 billion in 2014 to $
7.2 billion in 2015.
Envisions building a strong eco-system for
nurturing innovation and Startups in the
country and empowering Startups to grow
through innovation and design.
Venture Capitalists (VC) operating in India:
• Early VCs: Seedfund, Accel, Kae Capital, and
Venture East.
• Late VCs: Helion, Sequoia, Matrix.
Features of the Scheme:
• Simple Compliance Regime based on Self-
certification
• Legal support & fast-tracking patent
examination at reduced costs.
• Relaxed norms of public procurement for
start-ups
• Faster Exit.
• Fund support through a corpus of US$ 1.5Bn.
• Credit guarantee support ~ US$ 75Mn per
year for 4 years (ending in 2020)
21. Source: NASSCOM McKinsey Perspective 2025
IT Revenues to reach US$ 350 billion by
2025
Traditional tech
Digital tech
India technology & services revenue pool
USD billion
77%
23%
2014
119
2020E
225
~11% p.a.
2025P
350
62%
38%
Global enterprise tech spend will rise to USD 4
trillion by 2025, 80 per cent of incremental
tech spending will be digital
Indian technology services revenues projected
to reach USD 350 billion by 2020, CAGR of
11 per cent
Successful Indian companies will have to
fundamentally transform their business
models, solution offerings, organization and
capabilities to establish leadership
Revenue growth not the only indicator of
India’s tech leadership; factors such as
Digital revenues to spearhead growth
22. IoT, Big Data & AI
The Internet of Things (IoT) market in India
is expected to reach $15 Bn by 2020…roughly
5% of the global market.
Nearly 120 companies offer IoT solutions, 70%
of these IoT startups have emerged in the last five
years itself.
Cumulative amount of $60 Mn has been
invested in the last two years alone.
Healthcare and manufacturing are the leading
verticals demanding IoT solutions. Next-gen
commerce along with transport and logistics are
gaining adoption with connected vehicles and
systems.
New segments: Smart lifestyle, connected homes
& buildings and connected homes.
India’s first centre for excellence in Internet of
Big data analytics market in India has been valued
currently at $1.2 Bn…Market is growing at 26%
CAGR…expected to reach $16 Bn by 2025.
There are about 600 companies in this space out of
which 400 are startups and approx. India’s market
share is expected to be 32% looking at a
multipronged approach of skill development,
thought leadership, products, and platform to realize
the vision.
The analytics industry in India employs 90,000
people currently in sectors such as BFSI, retail,
telecom and healthcare and the growth is propelled
by demand for cloud-based solutions and predictive
analytics capabilities.
In India, more than 200 Artificial Intelligence
(AI)-focused global companies have collectively
raised more than $1.5 billion so far in the past year.
Driven by evolving technology and a flourishing
domestic market, Indian entrepreneurs are
increasingly exploring new opportunities in AI and
machine learning across a variety of applications
and use cases.
23. Industry working to mitigate key issues
Global Headwinds
(Economic slowdown,
currency volatility,
inflation, terrorism
etc.)
Changing face of
provider landscape and
new business models
Rapid changes in skill
demand; Re-skilling
current workforce
Cyber security-
mitigating internal
threats and building
cyber security as a
business segment
Need for speedy
implementation of
policies and initiatives
announced
Protectionist policies by
different countries-
restrictions on data and
skilled talent
1 2 3
4 5 6
23
rce: NASSCOM
24. ELECTRON
ICS
Top 10 electronic products contributing about 70%
by total revenue include:
• Mobile Phones
• Flat Panel TVs
• Notebooks
• Desktops
• Digital Camera
• Inverters & UPS
• Memory Cards & USB
Drivers
• 4W EMS
• LCD Monitors
• Servers
Segment: 2020 Mkt. Size
35
34
34
29
12
10
10
LED
Telecom Equipment
Laptops/Portables
Consumer…
Medical Electronics
Set Top Boxes
Automotive…
• Indian Electronics System Design and Manufacturing
(ESDM) industry is one of the fastest growing sectors
in the country.
• Changing global landscapes in electronics design and
manufacturing capabilities, and cost structures have
turned the attention of global companies towards India.
• State of Play:
− 65% of the electronics is currently imported;
− 25-30% of the systems simply assembled;
− less than 10% of the electronic systems are
completely designed and manufactured in India.
− Almost 100% of semiconductors are imported.
• Domestic production can cater to a demand of only
$100 Bn by 2020… demand-supply gap of $300 Bn.
Electronics imports, are currently the
3rd highest, next to crude and gold. ED 2017
25. • Policies to promote ESDM industry include:
National Policy on Electronics
Preferential Market Access
Modified Special Incentive Package (MSIP)
Scheme
Fab policy
Electronic Manufacturing Clusters (EMCs) and
Information Technology Investment Regions
(ITIRs)
Export Incentives
• To achieve a turnover of $400Bn by 2020 by
investing $100Bn.
• To build a supply chain…raise local production from
20~25% to over 60%.
• Preference for locally manufactured electronic goods
in Govt. procurement…not less than 30 % of the total
procurement.
National Policy on Electronics
Preferential Market Access
ELECTRONICS
…2
• Subsidy of 25% on Capex if the ESDM unit is in non-
SEZ and 20% on capex if within SEZ…available for
investments made within 5 years from date of
approval.
• 200% deduction on R&D for electronic chip
manufacturing units.
• Reimbursement of central taxes and duties (like
custom duties, excise duties and service tax) for 10
years in select high- tech units like Fabs,
Semiconductor Logic and Memory chips, LCD
fabrication…applications accepted till Dec 2018.
• Budget 2017-18: US$111 million) worth incentives
under MSIPS scheme.
• Grant assistance for setting up Greenfield &
Brownfield EMCs.
Modified Special Incentive Package Scheme (MSIPS)
Electronic Manufacturing Clusters Scheme
• O% Basic Customs Duty on products covered under
the Information Technology Agreement (ITA) of
WTO & Specified raw materials used for
manufacture of electronic components and optical
fibers and cables.
• Focus Product Scheme (FPS) – Duty Credit 2% of
Export Incentives
